I promise that any disputes between us will be argued at your house. Time passes and a dispute begins to brew. Now, I want to argue at my house, not at yours. You pay costs to argue at my house that you wouldn’t have incurred had I done as agreed. Should I have to reimburse your costs?
A Federal Court in Northern California said yes – I have to pay your costs because I broke my promise.
During a project for the U.S. Navy in Djibouti for electrical and mechanical power-plant upgrades, a Subcontractor agreed that any disputes between it and the Prime Contractor would be resolved in a California Federal Court. The Prime is a U.S. company with its headquarters in California. The Sub is a Lebanese company with no regular presence in the U.S. In fact, it appears the Sub has never been to the U.S.
Recap: The dispute has nothing to do with anything near your headquarters/office/house, the Project is nowhere near your office, I’ve never been near your office, it’s probably more convenient for you to argue near your office, which is why you included this term in the Subcontract, and (most importantly) I agreed to only argue near your office.
Result: The argument will be near your office, not mine and not near the Project where we both worked and lived for many months. And, I now have pay your costs incurred because I tried to argue with you near the Project.
Trick or Treat in Government Contract Claims
Without a request for a contracting officer’s final decision, claimants may seek treats, but get tricked instead.
Owner Nonpayment is No Defense to Miller Act Claim
As if you needed confirmation that the Federal Miller Act is a powerful tool for unpaid subcontractors, this is it. Even when a Prime ordered and accepted the Sub’s work, but didn’t have to pay under the Subcontract, the Subcontractor still. . . .
Trust, but Verify
Rely at your own risk upon a Contracting Officer’s statements when statutes or contract provisions may conflict.
Payment for Verbal Changes When a Writing was “Required”
Even if your agreement can only be modified by a writing, you may still have a good argument to be paid for extra work.
Pirates and Arbitration
How does a pirate solve a dispute (besides walking the plank)?
Bases Covered?
Contractors, will your current insurance policy cover “your work” as a joint venture partner? The typical answer is NO.
Two Paths at the Same Time to the Same Place
“Two roads diverged in a wood, and . . .” the Prime Contractor had to take both roads at the same time to the same place.
Rules, Which Rules?
Good Idea: Include a choice of law clause in your contract to promote consistency and predictability (while reducing potential costs and risk).
Government Liability for Third-Party Delays
Generally, the Government is not responsible for delays caused by third parties, even other contractors at its own project site, unless the Government affirmatively indicates the site will be ready and available.
